IBM to acquire PwC Consulting

By : |July 30, 2002 0

BANGALORE: IBM and PricewaterhouseCoopers (PwC) have signed a definitive agreement for IBM to acquire PricewaterhouseCoopers’ global business consulting and technology services unit, PwC Consulting. The agreement, approved by IBM’s board of directors and PricewaterhouseCoopers’ leadership board, says that IBM will pay PricewaterhouseCoopers an estimated purchase price of $3.5 billion in cash and stock. The transaction is subject to regulatory approvals and approval of local PwC firms through votes of their partners. The partnership deal is expected to be concluded around the end of the third quarter. PwC Consulting will no longer pursue its planned initial public offering.

According to both the companies, the acquisition is looked at creating a powerful, unmatched capability to help clients solve their business issues, exploiting world-class technology for improved business performance. “The client is the driving force behind the announcement with PwC,” said IBM president and chief executive officer Samuel J. Palmisano. “Clients are not only looking for innovative ideas to improve their businesses, they are seeking a partner with deep business expertise and the ability to exploit leading open standards-based technology to turn these ideas into bottom-line business benefits.

This acquisition underscores our commitment to this strategy. Our consulting and services professionals will provide a powerful capability beginning with business innovation and extending through implementation to help clients improve their competitiveness and drive sustained growth and profitability.”

“Together with the world-class innovations of IBM Research and our business partner offerings, this new business unit will deliver comprehensive end-to-end business and technology solutions.” PricewaterhouseCoopers CEO, Samuel A. DiPiazza, Jr., said, “This transaction fulfills our commitment to fully separate PwC Consulting from PwC.

It will unleash the consulting unit from the regulatory restraints of our industry, and will allow the business to reach its full potential. Combining PwC Consulting with IBM not only fully achieves the goals we set for the separation, it provides clients and our professionals with greater opportunities and access to innovative solutions.”

PwC Consulting, with estimated fiscal-year 2002 consulting revenues of approximately $4.9 billion, excluding client reimbursables, and some 30,000 employees, will be combined with the Business Innovation Services unit of IBM Global Services, creating a new global unit. Ginni Rometty, currently general manager of IBM Global Services – Americas, will become general manager of the new unit, reporting to Doug Elix, senior vice president and group executive, IBM Global Services.

This new global business unit will pull from the extensive portfolio of IBM capabilities to offer clients innovative, integrated solutions through business and technology consulting, industry insight and business process expertise together with the comprehensive services capabilities of the rest of IBM Global Services.

“Creating a single capability that fuses business and process insight with information technology provides the unique advantage our clients are reaching out for,” said Doug Elix, senior vice president and group executive, IBM Global Services. “This is an exceptionally good fit — both strategically and culturally. Our businesses complement each other and we speak the same language.”

Greg Brenneman, president and chief executive officer of PwC Consulting, said, “I’d like to congratulate IBM for making this bold, strategic move. Everyone wins in this transaction — our clients, our employees and IBM. When I came to PwC Consulting, I knew that aligning with a company such as IBM was in everyone’s best interest. IBM has positioned itself to be the industry leader for many years to come.” Throughout the process, IBM and PwC have been working with the SEC staff to establish procedures under a no-action letter to comply with SEC auditor independence rules.

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